Will a “gamma squeeze“ propel bitcoin to $150,000 per coin very quickly?

00:01 Will a gamma squeeze propel Bitcoin to 00:04 $150,000 per coin very quickly? The 00:07 answer is probably not, but it's worth 00:09 knowing what it is and preparing 00:11 accordingly. Now, the short take here is 00:14 what should you do? Buy as much Bitcoin 00:16 as you can and hold on to it for as long 00:17 as conceivably possible. That's the same 00:19 advice I've been giving from the 00:21 beginning of time. That's what you do. 00:23 Um, but what is a gamma squeeze? Gamma 00:25 squeeze sounds like some fancy technical 00:27 jargon that somebody would throw around 00:29 to try to make other people feel dumb. 00:31 Obviously, you know, I would never do 00:33 that. So, I'm going to try to explain it 00:35 in the simplest terms possible. Okay. 00:37 So, if you invest in any asset, stocks, 00:40 bonds, real estate, um commodities, 00:42 gold, silver, soybeans, it doesn't 00:44 matter. If you're investing for the long 00:47 term, it's called being long the asset. 00:50 O L O N G. So if somebody says I am long 00:54 Bitcoin that means that I am investing 00:56 hoping it will go up for the long term. 00:59 Now you can also be short an asset and 01:02 I'm not going to explain technically 01:03 technically how that works but you can 01:05 be short an asset by borrowing the asset 01:09 and hoping the price goes down and then 01:11 you return the asset at a lower price 01:13 later. You don't need to understand how 01:15 that works other than to say if somebody 01:17 is short an asset or is shorting an 01:20 asset. That means that they are betting 01:23 the price is going to go down. Now, I do 01:25 not recommend anyone ever short any 01:28 asset ever. If you believe in something, 01:30 invest in it. That's called going long 01:33 or being long the asset, which is great 01:36 because you can never when you're long, 01:38 you can never lose more money than you 01:40 have invested. And you know, worst case 01:42 scenario, the price dips and you know, 01:45 you're down, but who cares? You can wait 01:46 it out. If you are short an asset, often 01:49 you cannot wait it out because what 01:52 happens if you're a short an asset is if 01:54 the price starts going up, you're well, 01:57 let me let me cover this first. If you 01:59 are long an asset and the price drops by 02:01 50%, you're down 50%. So what? You just 02:04 wait. There's no way to end up 02:06 completely up a creek, you know, 02:08 screaming at the top of your lungs for 02:10 dear life because you're losing so much 02:11 money. That does not happen if you're 02:13 long an asset. But if you are short an 02:16 asset, your upside uh is sort of 02:20 leverage. You can you can make a lot of 02:21 money if the asset goes down, but your 02:24 downside is unlimited. meaning you could 02:27 end up on the hook for a huge amount of 02:28 money because if the asset goes up by a 02:31 factor of 10, you owe a ton of you you 02:35 basically owe all of that stock or that 02:36 Bitcoin back at a price that you can no 02:39 longer afford. So, as a result, there's 02:42 something called a short squeeze. A 02:45 short squeeze, well, first of all, 02:47 there's no such thing as a long squeeze. 02:49 You'll never hear people talk about a 02:50 long squeeze, at least not for people 02:53 who are not using leverage. Um, so if 02:55 you just own an asset and the price goes 02:57 up or the price goes down, so what? You 02:58 can just wait it out. But if you are 03:00 short an asset, what that means is you 03:03 have borrowed the asset hoping the price 03:05 will go down and you can return the 03:07 asset at a cheaper price. So, you know, 03:10 if I'm short Bitcoin, which I would 03:12 never be because it'd be the dumbest 03:13 thing in the world, but if I am short 03:15 Bitcoin, I could short Bitcoin at 03:17 $125,000 per coin, which means I borrow 03:20 Bitcoin at $125,000 per coin. I hope 03:23 that the price drops to 110. Then I buy 03:26 the Bitcoin back at 110, return the 03:28 borrowed Bitcoin, and I made up I make 03:30 the money between there between the 110 03:32 and the 125. So the problem in a short 03:35 squeeze is if the price goes up, your 03:38 your downside becomes unlimited because 03:40 as the price rises, uh, it squeezes your 03:43 collateral and as your collateral gets 03:46 squeezed, you are forced to buy the 03:48 Bitcoin to cover your position. 03:50 otherwise you get liquidated and lose 03:52 all of your money. Um, so the same thing 03:54 happens. I'm not sure if it's in futures 03:56 or options because I don't understand 03:58 that world well enough, but a gamma 03:60 squeeze is when too many people have bet 04:03 that the price will not end above a 04:05 certain level. So right now for the end 04:08 of October, there's a huge amount of I 04:10 guess puts and calls. I don't know. I 04:12 don't get into futures and options and 04:14 all that, but the magic number is 04:16 123,000. 1 2 3. It's easy to remember. 1 04:19 2 3. So there is a huge number of people 04:22 hoping that the price ends above uh 04:26 123,000 at the end of October and a 04:29 different set of a huge number of people 04:30 hoping that the price ends below 123,000 04:34 because if the price ends below 123,000 04:37 then all of the people who bet on the 04:40 price not exceeding it, they get to 04:43 collect their premiums on their options 04:45 or futures or whatever it is and it 04:48 doesn't cost them anything. But if the 04:49 price starts to go above 123,000, you 04:52 get what's called a gamma squeeze. A 04:54 gamma squeeze means a bunch of people 04:57 committed that in exchange for making 05:00 some money now that they would cover the 05:02 upside above 123,000. Now, they did that 05:06 because they did not think Bitcoin would 05:07 end October above 123,000. So, they 05:10 said, "Sure, I'll give give you 10% on 05:13 your money and I'll give you the upside 05:15 above 123,000. If it ends below 123,000, 05:19 I get to keep that 10%. But if it ends 05:21 above, I'm on the hook for an unlimited 05:23 amount of money. So the problem is if 05:26 the price goes above 123,000 and stays 05:29 there and starts climbing. Now you have 05:31 a huge number of people that essentially 05:34 the tide went out and they found out 05:36 that we all found out that everybody 05:38 swimming naked, right? That's the famous 05:39 saying about investing is when the tide 05:41 goes out, you find out who's been 05:43 swimming naked. Well, a lot of these 05:46 people uh that have essentially again my 05:50 brain does not want to go figure out 05:51 right now if they sold puts or calls or 05:53 you know options expiry and expiry and 05:56 all this sort of stuff. But anyway, all 05:58 the people that bet that the price of 05:59 Bitcoin would not be above 123,000 are 06:03 are on the hook for an unlimited amount 06:05 of losses if the price is above 123,000. 06:09 and therefore they have a significant 06:10 incentive if they can uh by selling 06:14 Bitcoin that they own to try to keep it 06:16 below 123,000. But if the price starts 06:18 to go higher, you get a gamma squeeze. 06:20 And a gamma squeeze is a bunch of people 06:23 that need to own a bunch of Bitcoin 06:26 because they are stuck covering the 06:29 entire upside above 123,000. So let's 06:32 say the price goes from 125 to 130. All 06:37 of these people are now seriously losing 06:39 money. Then the price goes to 135 and 06:42 they are now seriously seriously 06:44 seriously losing money. And what happens 06:46 in a gamma squeeze is all of those 06:48 people end up having to go buy Bitcoin 06:50 to cover themselves. Essentially, it's 06:53 like the tide went out and everybody is 06:55 scrambling to buy clothes because they 06:56 were hoping nobody was going to find out 06:58 they were swimming naked. But now that 06:60 the tide is going out, uh, clothing is 07:03 selling at a premium and everybody who 07:05 was swimming naked now really, really 07:06 really, really wants to buy some 07:08 clothes. So a gamma squeeze is 07:10 essentially in in this case at the end 07:12 of October because so many people have 07:14 bet that the price will or won't go 07:16 above 123,000. If the price goes up, it 07:20 starts squeezing all of those people 07:21 that were swimming naked because they 07:23 are on the hook for unlimited losses 07:25 above 123,000. Which means at some point 07:28 you can get a bunch of panic buying by 07:30 all the people who were swimming naked 07:33 trying to own enough Bitcoin up there to 07:35 cover their losses. Because as soon as 07:37 they buy the Bitcoin, they're not 07:39 subject to the losses anymore. For 07:41 example, at 120, you know, 123,000, 07:45 let's say that they can only stomach the 07:47 losses up to 130,000 because they were 07:49 betting the price was going to be down, 07:51 but instead it's up. Again, you don't 07:53 need to worry about this because nobody 07:54 who's watching this video is doing 07:56 options or futures or puts and calls and 07:59 all that, but it's worth knowing about 08:01 because it might result in the price 08:02 going up very quickly. Um, okay. So, the 08:06 price goes from 123 up to 130. Let's say 08:09 at 130, a bunch of them decide, I can't 08:11 take the pain anymore. I've got to buy 08:13 Bitcoin at 130 because I can't stomach 08:16 the losses above 130. So, a bunch of 08:18 them buy Bitcoin, which pushes the price 08:19 even higher to 135. Well, at 135, 08:23 there's a bunch more people who are 08:24 like, "Whoa, whoa, whoa. I can't stomach 08:26 the losses above 135." So, they go have 08:30 to cover their position by buying a 08:31 bunch of Bitcoin, which pushes the price 08:33 to 140, resulting in a bunch of people 08:35 that were positive it was never going to 08:37 get to 140 now panicking because now 08:40 they're going to be deep underwater 08:42 above 140,000 because they need to cover 08:45 themselves and buy close cuz the tide is 08:47 going out much farther than they 08:49 expected. And that pushes the price with 08:52 all of those people buying to 145 and it 08:54 just keeps happening. So if we get a 08:57 very rapid price rise up to 150, first 08:60 of all, it might not stay there. I mean, 09:01 we might go to 150 and then drop back 09:03 down into the 130s or something like 09:05 that. Nobody knows. Uh but uh the reason 09:09 I tell you all of this is because in my 09:12 opinion, you should buy as much Bitcoin 09:13 as you can and hold on to it for as long 09:16 as conceivably possible right now. Now, 09:18 why should you do that right now? 09:20 Because as soon as you end up with a 09:21 gamma squeeze, if once happens, the 09:23 price starts to rise very quickly. As 09:25 soon as the price starts to rise very 09:27 quickly, it becomes pretty dicey when 09:29 you're out there buying Bitcoin because 09:31 again, you're all going to be 09:34 so the price rockets up and you're going 09:36 to be asking, "Hey, should I buy Bitcoin 09:37 right now or not?" And I'm going to say, 09:39 "Well, dang it. We're in the middle of a 09:40 gamma squeeze. Uh things are pretty 09:42 crazy. It would have been nice if you 09:44 bought the Bitcoin before this because 09:46 right now you're basically trying to buy 09:47 Bitcoin in the middle of a storm." So, 09:50 that doesn't mean it's a bad time to buy 09:51 Bitcoin. It just means it's uh, you 09:53 know, the price is going to be going 09:54 kind of crazy for a period of time. So, 09:56 the reason I tell you all of this is 09:58 because if a gamma squeeze happens and a 10:01 bunch of you are like, "Hey, Joel, why 10:02 didn't you tell me Bitcoin was about to 10:04 rocket up toward 150, I'm going to say I 10:07 did. I did. I recorded an entire video 10:10 explaining what a gamma squeeze was." 10:12 And I only bring this up because James 10:14 Czech, my favorite Bitcoin analyst who 10:16 does the Czech on chain newsletter, says 10:18 there is a possibility this is going to 10:20 happen, which is the only reason I'm 10:21 aware of it. And he tends to be right. 10:24 Even though he did not provide a 10:26 probability this would happen, he tends 10:28 to be right. Um, so he brought it up and 10:30 said, "Hey, you know, we may need to be 10:33 sort of aware that a gamma squeeze could 10:35 be happening. And if he's going to bring 10:36 it up, I feel like part of my job is to 10:38 translate his more technical view of the 10:41 world with a more downto-earth view. And 10:43 again, if we do get a rapid rise to 150 10:46 and people are complaining that I should 10:48 have told them it was coming, I'm going 10:50 to send them this video and say, "I did. 10:52 I did tell you it was coming and you 10:54 should have bought the Bitcoin and now 10:56 you got to buy it at a lot higher 10:57 price." Which is unfortunate. But um 10:60 anyway, I didn't want to not record a 11:02 video about it. And then the price 11:03 rockets to 150 and everybody's like, 11:05 "Wait, I should have known. I should 11:06 have known. I should have known. I would 11:08 much rather record a video and say, 11:10 "Look, I don't know what the probability 11:12 that we get a super rapid rise to 11:14 $150,000 is." I don't know. Is it 20%? 11:17 Is it 50%. I don't know. Nobody knows. 11:20 But if it does happen, I want to give 11:22 give you as much knowledge and 11:24 information as I possibly can so you can 11:27 make an informed decision. And my advice 11:29 stays the same. Buy as much Bitcoin as 11:30 you can. Hold on to it for as long as 11:32 conceivably possible. It really is that 11:34 simple.